In an open letter to the World Gold Council, precious metals investor Eric Sprott (PHYS, PSLV) excoriates the group for abetting the decline in gold prices with faulty statistics, mostly as it relates to Asia.
The WGC pegs gold production at a robust 2.8K tons this year, but this includes gold mined in China and Russia which is used solely for domestic demand, says Sprott. Adjusting for this, Sprott sees total mine supply this year of 2.14K tons. Making adjustments to better represent consumption from emerging markets, Sprott sees annual demand of 5.2K tons, and thus supply being about 3K tons in shortfall.
"I urge the leaders of the WGC, for the benefit of their own members, to improve the quality of their data and find alternative sources than the GFMS, which paints a misleading picture of the real demand for gold. This lack of quality information has certainly been one of the driving factors behind the lack of investors’ confidence towards gold as an investment."